At a glance
Parliament's cross-party AI committee recommended on 12 October 2026 a national policy to encourage investment in Australian computing infrastructure and data centres, signed by Labor and Coalition members.
It wants national planning principles for AI infrastructure that cover access to "reliable and competitively priced energy", water, telecommunications and supply chains, to "support timely investment".
The committee wants government buying to favour Australian providers under "strong pro-Australian government procurement guidelines", with a register setting out which companies count as Australian sovereign AI companies.
The committee wants critical AI infrastructure covered by the Security of Critical Infrastructure framework, and labs to reserve compute for national security and university research.
The committee wants labs training models in Australia to give security agencies early access to new models, and data centre standards applied through state planning laws.
Parliament's Joint Select Committee on Artificial Intelligence has asked the government to encourage investment in Australian data centres, plan their energy, water and connectivity nationally, and steer its own AI spending towards Australian providers. The committee's letter to Prime Minister Anthony Albanese of 12 October 2026 was signed by Labor chair Jo Briskey and Liberal deputy chair Senator Jonathon Duniam. The ABC reported the letter on 13 October.
Labor and the Coalition both put their names to the recommendations, through the committee's chair and deputy chair. The government backed the Coalition's proposal for the committee, according to a joint statement of 20 August 2026 from shadow ministers Andrew Hastie, Jonathon Duniam and Aaron Violi. Its final report is due by 30 November.
"Australia must be a beneficiary of AI," the committee wrote, and must be "not merely a consumer of AI technologies developed elsewhere, but a trusted, competitive and strategically capable participant in the global AI industry". The letter also recommends conditions on frontier labs operating in Australia, including early access to new models for security agencies where they train here.
Committee backs data centre investment
The committee recommends "a coordinated national policy to encourage investment in, and development of, sovereign Australian AI capabilities, including domestic computing infrastructure, data centers, research, model development, commercialisation, and strategically important supply chains". That policy should identify where to strengthen "Australian ownership, control and operational capability".
It wants nationally consistent requirements and planning principles for "strategically important AI infrastructure, including access to reliable and competitively priced energy, water, telecommunications connectivity, computing capacity and secure supply chains". Those arrangements "should support timely investment and infrastructure development while appropriately managing impacts on communities, energy systems and national resilience", the committee wrote.
The committee wants the government to keep investing in public research computing directly, through the National Collaborative Research Infrastructure Strategy, the Commonwealth program that funds national research facilities, "to meet national research needs that cannot be met by LLM training data centres". The Australian Financial Review, which reported the letter on 12 October under the headline "Bipartisan AI inquiry urges Labor to invest in data centres", read that as a push for the government to invest directly in compute.
Other countries have outspent Australia on AI by "orders of magnitude", Rupert Taylor Price, founder of cloud provider Vault Cloud, which has received A$22.5 million from the National Reconstruction Fund, told the committee, according to the Financial Review. "It's in millions and hundreds of millions when other countries are doing billions and hundreds of billions," he said.
South Korea announced a US$735 billion AI plan in October, including a US$71 billion public-private fund, the paper reported.
Commonwealth Bank estimates cited by the Department of the Prime Minister and Cabinet put data centre investment in Australia at around A$150 billion by 2030. In its AI safeguards recommendations, the committee wants to avoid "unnecessary regulatory burdens that would inhibit innovation or investment". It states "a preference for outcomes-based, risk-proportionate and technology-neutral regulation", and wants Australian AI standards aligned with international ones so they "facilitate international investment, research partnerships, trusted technology cooperation and export opportunities".
Canberra urged to buy Australian AI
The committee recommends whole-of-government procurement policies that "leverage Commonwealth purchasing power to stimulate investment in Australian AI capabilities". It calls for "strong pro-Australian government procurement guidelines" that send the private sector a signal of "confidence in Australian providers".
"Arrangements that ensure Australian industry has a fair chance of providing Australian services to Australian Government agencies are essential to ensuring that Australia can develop sovereign capability," the letter says. Procurement would still have to meet Australia's legal and international obligations.
The committee also wants the government to keep a register of sovereign AI companies, with thresholds and definitions for which entities can call themselves Australian sovereign AI companies. Those definitions could decide which providers the procurement preference reaches.
The cloud-first policy took effect on 1 July 2026, and on 31 August the Digital Transformation Agency published six sovereignty tests for suppliers seeking coordinated contracting arrangements, the central deals departments must buy under, including where data and infrastructure sit and whether foreign law can override Australian protections. Government data centre space is leased through Data Centre Panel 3, which the six tests do not cover.
AI sites could be covered as critical infrastructure
The committee wants the government to "ensure the Security of Critical Infrastructure framework is fit for purpose and covers critical AI infrastructure". That law sets security duties for owners of assets such as data centres serving government.
It also recommends a coordinated approach to AI across defence, intelligence, law enforcement and national security agencies, including "strengthened partnerships with Australian and international frontier AI developers" and "secure access to advanced AI capabilities". It wants measures so "national security institutions can rapidly adopt emerging technologies".
Labs asked to reserve compute for research and security
The committee wants "a certain amount of overall compute capacity" reserved for the national interest "in any arrangement where frontier and other labs operate in Australia". It names national security operations and university research, and says health and social services could also share the allocation. That wording covers labs running models for Australian users as well as labs training them.
The fifth of the national Expectations of data centres and AI infrastructure developers, published in March 2026, asks hyperscalers and neoclouds to open compute to Australian start-ups, small businesses, researchers and not-for-profits on favourable terms. The committee's recommendation extends to national security operations.
Pacific nations should share in AI deals, MPs say
The committee wants the government to work with Pacific nations so the benefits of arrangements "to facilitate investment by AI developers and data centre operators can be shared with Pacific nations on a secure and stable arrangement". It says that would support "continued stability in the region".
The NSW Liberals have separately proposed digital embassies for Pacific nations in Australian data centres.
Labs training here would give security agencies early access
The committee recommends that "as a part of any arrangement facilitating the operation of frontier lab training activity in Australia, early access to new models be provided to relevant agencies such as the Australian Signals Directorate (ASD)". The ASD is Australia's signals intelligence and cyber security agency, with arrangements to be set on its guidance.
The recommendation follows an OpenAI agent's unauthorised access in June to a Medicare statistics portal run by Services Australia, which OpenAI apologised for in September. The committee also wants independent evaluators embedded in frontier labs and incident reporting to government with clear deadlines.
Anthropic's first Australian lease, at Zerra DC's Western Downs Digital Park in Queensland, is expected to run Claude for users rather than train it, the Australian Financial Review has reported.
Frontier labs told the committee that copyright settings are "a barrier to undertaking training in Australia", and it recommends the government examine them while making sure creators are paid.
Data centre standards would run through state planning law
The committee wants "nationally consistent standards for the development and operation of data centres", adopted by the states and territories and "implemented through respective state and territory planning laws". They would cover resource use "including additionality of energy generation", meaning new generation added to the grid rather than drawn from existing supply, as well as approvals, community input and penalties.
The Office of AI in the Department of the Prime Minister and Cabinet released a consultation paper on national standards for data centres and frontier AI on 17 September 2026, with submissions closing on 9 October. National Cabinet agreed on 26 August 2026 that the Commonwealth would work with the states and territories on consistent mandatory standards for data centre energy, water and land use, with legislation planned for early 2027.
Measure | Office of AI consultation, September | AI committee letter, 12 October |
|---|---|---|
Data centre standards | Commonwealth minimum, with each state and territory able to go further | Adopted by the states and territories through their planning laws |
Compute for Australian use | A compute reservation scheme listed as one option | A share reserved for national security and research |
Security condition on training | Reporting defined AI incidents, as an example | Early model access for security agencies, plus incident reporting |
Source: Department of the Prime Minister and Cabinet consultation paper, September 2026; Joint Select Committee on Artificial Intelligence letter to the Prime Minister, 12 October 2026.
What does it mean for Australian data centres?
National planning principles for energy, water and connectivity, and government buying steered to Australian providers, would both shape where and for whom new capacity is built. All of it is advice to government until the government acts on it.
The security agency access applies only to labs that train models in Australia, and labs have told the committee copyright settings are a barrier to training here. Anthropic's first Australian lease is expected to run Claude for users.
We expect reserved compute to be the first of the committee's lab conditions written into an Australian data centre deal, because it covers labs running models for users, which is what Anthropic's first Australian lease is for.
What to watch
The sovereign AI register. Its thresholds and definitions could decide which Australian operators, neoclouds and AI companies qualify for the procurement preference the committee wants.
The planning principles. The committee has asked for national principles on energy, water and connectivity for AI infrastructure, and the national standards bill is the first place they could appear. The ABC reported the government wants it introduced by the end of 2026.
The size of the compute reservation. The committee asks for "an adequate amount" of compute, and the share and its price are still to be set.
The remaining hearings. The committee sits in Canberra on 14 and 16 October and in Sydney on 20 October 2026, before its final report by 30 November.